A Win For Self Managed Superannuation Funds???

Treasurer Jim Chalmers has bowed to public pressure with a super-sized backdown when he unveiled a revised version of the government’s superannuation tax plan.

Key updates:

  • Removal of tax on unrealised gains
    The proposal to tax increases in asset values that haven’t been sold has been withdrawn – in full. Only realised earnings, such as dividends, interest and capital gains on disposal, will be subject to the higher tax rates.
  • Indexation of the thresholds
    The $3 million threshold will be indexed to prevent “bracket creep”.
  • Delayed start date 
    If the required legislation passes through parliament the reforms will take effect from 1 July 2026. A delay of 12 months.
  • Low-Income Superannuation Tax Offset (LISTO)
    This will increase from $500 to $810 with eligibility expanded to individuals earning up to $45,000 from 2027, providing support to lower-income Australians.
  • Defined benefit schemes
    Those with defined benefits superannuation will now receive the same treatment.

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Is there a sting in the tail?

  • New Two-tier rate structure
    • Earnings on balances above $3 million still to be taxed at 30%
    • Earnings on balances above $10 million now taxed at a new rate of 40% (this cap of $10 million dollars is also to be indexed)

Further consultation ahead. Will there be more changes to come?

The government have said they will continue to consult on key technical aspects of the reforms, including:

  • The focus on future earnings
    With the removal of tax on unrealised gains, the government now needs to determine how gains accrued to date will be calculated and protected.
  • Calculation of income and attribution to members
    This will be “closely aligned to existing tax concepts” but it remains to be seen exactly how taxable income will be determined and attributed to the members with different balances.
  • Making additional changes to ensure commensurate treatment for defined benefit members.

These measures will provide a saving to the budget or around $1.6 billion (after allowing for the increased cost of the LISTO)

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While the latest announcement offers relief for many SMSF trustees, it’s important to note that we still don’t have any draft legislation.

We will continue to monitor Treasury updates and provide further analysis once more information becomes available.

For personalised advice on how the new superannuation tax reforms could affect your SMSF, get in touch with your trusted Hall Chadwick advisor.